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A 256-site, fully implantable, 3-D neural recording microsystem has been developed. The microsystem incorporates four active neural probes with integrated circuitry for site selection, amplification, and multiplexing. The probes drive an embedded data-compression ASIC that successfully detects neural spikes in the presence of neural and circuit noise. The spike detection ASIC achieves a factor of 12 bandwidth reduction while preserving the key features of the action potential waveshape necessary for spike discrimination. This work extends the total number of neural channels that can be recorded across a transcutaneous inductively coupled wireless link from 25 to 312. When a spike is detected, this ASIC serially shifts the 5-bit amplitude and 5-bit address of the spike off of the chip over a single 2.5 Mb/s wired or wireless line. The spike detection ASIC occupies 6 mm2 in 0.5 μm features and consumes 2.6 mW while the entire microsystem consumes 5.4 mW of power from a 3-V supply.